10 November 2017

Uber bad news?

Q: When Uber drivers are working, who are they working for?
A: Uber

That is the conclusion reached today by the Employment Appeal Tribunal ('EAT'), at least in respect of those drivers who brought this test case – James Farrar and Yaseen Aslam.

In the most significant decision to date on gig economy workers, Uber has lost its appeal against an Employment Tribunal's decision that its drivers can be considered 'workers', and therefore benefit from various employment protections (including paid holiday, minimum wage, pension provision and protection from discrimination). Given the potential impact of this case on the gig economy as a whole, the decision is expected to be appealed, potentially directly to the Supreme Court.

The EAT upheld the Tribunal's decision that in reality drivers were an integral part of Uber's taxi business, and were subject to a sufficient degree of control by Uber – these were key factors in the finding that the drivers were 'workers' rather than independent contractors running their own businesses.

This ruling follows the courts' recent trend of seeking to extend employment protections into the gig economy – all such cases brought to date by gig economy workers have been decided in favour of the workers. This was despite Uber basing its appeal on the specific requirements imposed by the minicab licensing laws and on the law of agency, an approach that distinguished it from other gig economy cases.

However, despite these arguments, the EAT appeared to be comfortable in applying principles – derived from both legislation and case law – which are well-established and tend to pre-date the birth of the gig economy and its innovative working structures. Put simply, it remains the case that, whilst any written agreement or other description of an individual's engagement will be relevant, a Tribunal's starting point should be to look at the reality of the working arrangements. If a contract does not reflect reality, it can be discounted.

Indeed, the EAT's approach seems to follow the underlying trend of the recent gig economy working status cases (e.g. Pimlico Plumbers, CitySprint, Excel). These suggest that the traditional factors to assess working status, in particular the extent to which an individual is both subject to control by his/her putative employer and integrated within the business, remain relevant. More significantly, though, there is a strand running through all these cases (and Matthew Taylor's 'Good Work' review of modern working practices) – that individuals who are dependent on their employers should be treated as workers (or employees). In short, those who are in need of the protection offered by our regulatory regime should receive that protection; those who are not (because they can operate independently of a more powerful organisation), need not.

So, what next for gig economy businesses? Is this a death knell? No – of course not. Many such disrupters have already been re-evaluating their approaches in order to operate a profitable model without undue levels of risk. Some will conclude they need to change their structures; some even their entire business model. There will, clearly, be some businesses who struggle as a result, but these are disrupters – if any organisations can evolve quickly, it will be these. And, of course, they will not be short of armies of creative lawyers to help them design new, commercially attractive, ways of working with their drivers, riders, providers or plumbers and continuing to provide services in the flexible, on demand, fashion that customers appear to want.

Category: Article

Client types: Private companies